NSSF Confusion: Employers confused on anticipated changes in pension contributions

Kenyan employers are facing increasing uncertainty about anticipated changes in pension contributions as the initial year of the NSSF Act, 2013, implementation concludes in February, leaving them without clarity on the subsequent deduction levels.

The government initiated the Act last February, elevating mandatory contributions from a fixed Sh200 per employee (matched by the employer) to a progressive plan, eventually reaching six percent of employees’ salaries.

Law implementation mandates incremental deductions over the first five years. In the previous year, NSSF established the lower and upper earnings limits at Sh6,000 and Sh18,000 per month, respectively. Consequently, employees earning Sh6,000 contributed Sh360, while those earning Sh18,000 and above contributed Sh1,080.

Guidelines issued in February last year by then NSSF CEO David Mwangangi stipulated, “After the first year, the lower earnings limit shall be the amount gazetted by the Cabinet Secretary Ministry of Labour, Social Security, and Services annually as the average statutory minimum monthly basic wage for the year.”

In contrast to this, the law directs that the lower earnings limit for the second year (current calendar year) shall be Sh7,000, increasing the minimum contribution to Sh420.

Efforts to seek clarification from NSSF CEO David Koross regarding February’s contribution structure were unsuccessful, as he did not respond to text messages or calls. Similar attempts to contact Jacqueline Mugo, Executive Director of the Federation of Kenya Employers, regarding employer-government engagements and preparations for the upcoming transition, were also unfruitful.

President William Ruto has expressed a keen interest in increasing NSSF contributions, targeting a growth to Sh1 trillion by 2027, with an additional Sh400 billion expected in the next five years, as mentioned during Jamhuri Day celebrations last month.

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